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Indigo Reports Full Year Results

Accelerates Transformation

TORONTO, May 27, 2014 /CNW/ - Indigo Books & Music Inc. (TSX: IDG),
Canada's largest book, gift and specialty toy retailer reported revenue
of $868 million for its fiscal year ended March 29, 2014. Total revenue
decreased 1.3% compared to the previous year which was extraordinarily
impacted by the Fifty Shades and Hunger Game trilogies. Lower eReader
sales and the Company operating five fewer stores also had some impact
on revenue. Excluding the impact of the Fifty Shades and Hunger Game
trilogies, revenue increased 1.3%.

Commenting on the results, CEO Heather Reisman said, "In an industry
which is world-wide experiencing meaningful sales declines, we are
pleased with the customer response to all our transformation efforts,
with the sales performance, and with the potential for further growth
and profitability moving forward."

The Company reported a net loss for the year of $31 million compared to
net earnings of $4.3 million last year. The loss was the result of
significant operating investments in the Company to accelerate its
transformation, somewhat lower margin rates due to an increasingly
competitive retail environment, higher non-cash tax expense as the
Company recorded a valuation allowance against its tax assets, higher
severance costs due to a reorganization of its workforce during the
fourth quarter, and higher non-cash store impairment charges.

Revenue for the fourth quarter was $184 million, up $0.3 million from
the same quarter last year. Net loss for the quarter was $14 million
compared to a net loss of $8.2 million last year. The increased loss
was due to lower margin rates, non-cash store impairment charges,
severance costs, and ongoing investments in the Company's
transformational strategy.

Further commenting on the results, CEO Heather Reisman said, "We feel
strongly that the investments made to accelerate our transformation are
absolutely right to ensure Indigo remains a strong, vibrant and valued
brand for customers, employees and shareholders. Based on performance
so far this quarter, we are certainly seeing the traction we hoped for
with our investments."

Subsequent to the quarter, Indigo launched the first two American Girl®
Specialty Boutiques outside of the United States to the delight of
thousands of Canadian fans. The launch of the 1800 square foot
boutiques located at Indigo's Yorkdale Mall location, and Chapters on
Robson Street in Vancouver serve to reinforce Indigo's commitment to
the importance of creative play for kids in partnership with one of the
most adored and iconic brands in the world. Response has been
outstanding.

Forward-Looking Statements
Statements contained in this news release that are not historical facts
are forward-looking statements which involve risk and uncertainties
that could cause results to differ materially from those expressed in
the forward-looking statements. Among the key factors that could cause
such differences are: general economic, market or business conditions
in Canada; competitive actions by other companies; changes in laws or
regulations; and other factors, many of which are beyond the control of
the Company.

Non-IFRS Financial Measures
The Company prepares its consolidated financial statements in accordance
with International Financial Reporting Standards ("IFRS"). In order to
provide additional insight into the business, the Company has also
provided non-IFRS data, including comparative store sales growth, in
the press release above. This measure does not have a standardized
meaning prescribed by IFRS and is therefore specific to Indigo and may
not be comparable to similar measures presented by other companies.
Comparative store sales growth is a key indicator used by the Company
to measure performance against internal targets and prior period
results. This measure is commonly used by financial analysts and
investors to compare Indigo to other retailers. Comparable store sales
are defined as sales generated by stores that have been open for more
than 12 months on a 52-week basis.

About Indigo Books & Music Inc.

Indigo is a publicly traded Canadian company listed on the Toronto Stock
Exchange (IDG). As the largest book, gift and specialty toy retailer in
Canada, Indigo operates in all provinces under different banners
including Indigo Books & Music; Indigo Books, Gifts, Kids;
Indigospirit; Chapters; and Coles. The online channel, indigo.ca, offers a one-stop online shop with a robust selection of books, toys,
home décor, stationery and gifts.

Indigo founded the Indigo Love of Reading Foundation in 2004 to address the underfunding of public elementary school
libraries. Every year the Indigo Love of Reading Foundation grants $1.5
million to 20 high-needs elementary schools so they can transform their
libraries with the purchase of new books and education resources. To
date, the Indigo Love of Reading Foundation's Literacy Fund has
committed $15.5 million to more than 170 schools nationally. The
Foundation's annual grassroots Adopt a School program unites employees,
customer, schools and their communities to raise funds to put even more
books into the hands of children. Over the past five years we have
raised over $2.0 million so 400,000 children have a book to call their
own.

To learn more about Indigo, please visit the Our Company section at indigo.ca.